TORONTO, Dec 3 (Reuters) - The Canadian dollar extended its
slide against the U.S. dollar to a sixth straight day on
Wednesday, in part because of declining oil prices and
heightened risk aversion.

Bonds fell as U.S. stock markets rebounded late in the
session.

The Canadian dollar finished the North American session at
C$1.2535 to the U.S. dollar, or 79.78 U.S. cents, down from
C$1.2510 to the U.S. dollar, or 79.94 U.S. cents, at Tuesday's
close.

Risk aversion has helped the U.S. dollar rally against
major currencies, and the Canadian dollar was among those that
have been sideswiped by the trend, said Paul Ferley, assistant
chief economist at Royal Bank of Canada.

"In part, it's just a casualty of the U.S. dollar
strengthening. We've got this pattern of growing concern about
the global outlook," he said.

"It's been abetted by the continued slide in oil prices,
again a reflection of growing concern about global growth in
the near term."

Oil prices, which fell below $47 a barrel on Wednesday,
[ID:nSP68559], have been a weight on the currency for nearly a
week. Canada is a major oil producer and exporter and its
currency is often influenced by oil price moves.

Market attention will now turn to central banks to see how
much they'll move to stimulate their economies and stave off
recession. Four central banks are due to set interest rates on
Thursday, including the Bank of England and the European
Central Bank.

The Reserve Bank of New Zealand cut its official cash rate
to 5 percent from 6.5 percent, the lowest level since December
2003. [ID:nWEL81490]

"The next 24 hours will be interesting. We've got a number
of central banks who I think will cut rates very, very heavily.
It will be interesting to see how the market reacts," said
Shane Enright, a currency strategist at CIBC World Markets.

The atmosphere of political crisis in Ottawa also "doesn't
help" the currency, Enright said. The prime minister will
address the nation on Wednesday at 7 p.m. EST (2400 GMT) as
part of a growing political and constitutional battle over
whether the opposition should be allowed to replace the
Conservative government. [ID:nN03505321]

BONDS TRIM LOSSES

Bond prices were lower across the board, reflecting a
turnaround in U.S. stock markets toward shares of companies
that hold up well in recessions.

Bonds also continued to unwind some of the gains made
earlier in the week, and ahead of the Canadian and U.S. jobs
reports this Friday.

Canadian employment data for November is the last piece of
major data before the Bank of Canada makes its next interest
rate announcement on Dec. 9.

"Given indications of deepening declines in the U.S.
economy, the Bank of Canada will be prompted to take out
additional insurance to try to limit the fallout here in
Canada," said Ferley.

Royal Bank of Canada expects the central bank will slash
rates by 50 basis points next week.

The two-year bond fell 6 Canadian cents to C$102.24 to
yield 1.604 percent. The 10-year bond was off 7 Canadian cents
at C$108.88 to yield 3.159 percent.

The yield spread between the two-year and 10-year bond was
157 basis points, down from 158 at the previous close.

The 30-year bond lost 57 Canadian cents to C$120.83 to
yield 3.797 percent. In the United States, the 30-year treasury
yielded 3.1725 percent.
(Reporting by Ka Yan Ng; editing by Rob Wilson)